A world without cash is coming and sooner than you might think. From next year, all retailers across Europe will have to accept contactless payments, and, by 2020, every single payment terminal across the region will give consumers the ability to tap and pay, according to MasterCard’s Senior Vice President Mike Cowen.
And it isn’t just financial services companies that are calling for a cull on cash: a number of high-profile economists are too, including the German Keynesian economist and member of the German Council of Economic Experts, Peter Bofinger. In an interview with Der Spiegel, he labelled coins and banknotes “an anachronism” that make it harder for central banks to enforce monetary policy, such as applying negative interest rates with the intention of stimulating the economy. Even governments are getting on board, with Danish authorities saying retailers could no longer be legally bound to accept cash as early as next year.
[P]hysical representation of value, such as paper currency, helps individuals exercise restraint
Cutting crime
This drive towards a cashless society is clearly a concerted effort from a number of influential institutions, and there is much to gain in ditching paper for plastic. For starters, it would help reduce certain types of crime, namely robbery. In a world without cash, there would be no need for people, personnel, shops or even banks to handle or hold it, which removes a big incentive for criminals, as the likelihood of walking away with anything would be significantly diminished. In fact, one would-be Swedish bank-robber had his plans scuppered a couple of years ago when he tried to force a bank teller in central Stockholm to hand over some krona, only to find out the branch no longer held cash.
Removing cash from circulation is also great news for governments – especially at a time when so many have budgets in need of balancing – as it allows them to enhance their tax base: cash-in-hand deals will be made obsolete as all transactions in the economy leave a digital footprint that can be traced. There are even those who contend an end to physical currency transactions will have the power to constrain the shadow economy and its trade of illicit goods and services.
The pain of paying
But despite advocates’ best attempts to publicise the benefits of a cashless society, there are some who urge people to think about the wider value of money, before banishing it for good.
Michael Busk-Jepsen is a Professor of Sociology at the London School of Economics and the author of The Social Life of Money. While he understands the attraction of a world where cash is obsolete, he argues it still has a role to play. “Cash is a more socially inclusive form of payment and allows us to escape the grasp of ‘big data’ when we use money”, he told The Guardian. “I don’t think the use of cash should be stigmatised or banned. Notes and coins still have their uses, and our attachment to them manifests itself in all kinds of surprising ways, such as with ‘real’ representations of bitcoin.
“Complementary currencies – the Brixton pound [a local currency in use in South London], for example – also use notes, and their organisers attach quite a bit of symbolic significance to the physical representations of the special qualities and identity of these particular forms of money. Anyone who has seen the Brixton £10 note – the ‘Ziggy’ – will know what I mean.”
The meaning of, or for a better word, the value that we ascribe money helps regulate our spending habits, with a report by the American Psychological Association finding that, “there is a tight coupling of the consumption and the payment, thereby accentuating the pain of paying. In the case of credit card purchases, actual parting of the money occurs after the purchase decision, thereby dulling the pain of paying”.
What this means is that a physical representation of value, such as paper currency, helps individuals exercise restraint – something that could come in handy in such a debt-filled world. But in a consumerist culture and economy, self-control and saving are a hindrance to growth. And so, with negative interest rates becoming commonplace, coupled with a curtailing of cash, the incentive to spend rather than save has never been greater. How this will impact the stability of the world’s economies is yet to be seen.
The announcement by Brussels will give Google a two-week extension in order to formally respond to the anti-trust case brought against the company.
“The Commission has now extended [it] to August 31,” explained a company spokesperson.
The EU’s investigation surrounds complaints made by competitors that Google was giving preferential treatment to its own shopping product in its search engine.
“The Commission’s objective is to apply EU antitrust rules to ensure that companies operating in Europe, wherever they may be based, do not artificially deny European consumers as wide a choice as possible or stifle innovation,” explained EU Anti-Trust Commissioner, Margrethe Vestager.
If found guilty, Google is set to face heavy fines, with the Brussels capable of fining the company up to 10 percent of its yearly earnings – which equates to approximately €59bn ($66bn).
“In the case of Google I am concerned that the company has given an unfair advantage to its own comparison shopping service, in breach of EU antitrust rules,” added Vestager. “Google now has the opportunity to convince the Commission to the contrary.”
EU officials have been quick to jump on Google’s recent restructuring, which saw the company launch the holding company Alphabet, and were adamant that it would not affect its investigation: “A company does not insulate itself from a competition investigation through a change in corporate structure,” EU spokesman Ricardo Cardoso said in email to technology website recode.
Apple
“Diversity is critical to innovation,” wrote Tim Cook in a recent Inclusion & Diversity filing. Company reports show that, as of 2015, 69 percent of Apple’s workforce was male and 31 percent female – a slight improvement on last year’s 70/30 split. The positive news is that 35 percent of new hires were women and the company hired more diverse candidates this year than in any other to date.
Facebook Facebook was among the first big names in tech to release its diversity statistics when it made information public last year. Figures for this year show that women represented a 32 percent share of the company’s workforce, up from 31 percent in 2014. “Our work is producing some positive but modest change and our new hire numbers are trending up,” wrote Maxine Williams, Global Director of Diversity, in a blog post.
Pinterest Pinterest this year made public its ambitious diversity goals for the coming year, as it looks to right some of the problems in tech. The percentage of female employees reached 42 percent this year, up from 40 percent in the last, and in 2016 the company plans to increase diversity for engineering and non-engineering roles, while also implementing a Rooney Rule-type requirement in order to focus more on unrepresented backgrounds.
Google Google’s diversity strategy focuses on four key areas: hiring diverse Googlers; fostering a fair and inclusive culture; expanding the pool of technologies; and bridging the digital divide. However, seven out of 10 employees are male and the figures on this point show that progress has come slow. The company says it will spend $150m through 2015 on diversity initiatives in the hope that it might level the playing field somewhat.
Intel Intel released its Mid-Year Inclusion Report in August and revealed that over 43 percent of new hires in the US were female, Native American, Hispanic or African American – otherwise referred to as ‘diversity hires’. “Our commitment to diversity and inclusion extends beyond traditional views to include diversity in our supply chain, capital investments, and global marketing,” according to Intel, and the company has so far committed $300m to this end.
Privacy is a basic right every person on the planet is entitled to. Although it is not as pressing as the right to food or shelter, privacy is an inalienable right nevertheless, it is still one of those values that constitute our notion of humanity. In contrast to other rights in today’s well informed and increasingly libertarian world, however, privacy is in a state of regression. The internet, despite the plethora of benefits it has brought mankind, has facilitated this attack.
As a result of the world’s transition to the web and the constant stream of information that is shared on social media, organisations are able to collect masses of personal data and create incredibly comprehensive databases for profit. This information is either used for the company’s own commercial purposes or sold on to data-hungry businesses. In some cases, it is even used by the state.
“The over-collection and misuse of personal data undermines our freedom of association”, says Julia Horwitz, Director of the Consumer Privacy Project at the Electronic Privacy Information Centre. “Our online social connections, participation in online debates, and our interests expressed through our online activities can now be used by the government and companies to make determinations about our ability to fly, to obtain a job, a clearance, or a credit card.” While the public is increasingly aware of such practices and the whittling away of their privacy, the increasingly sophisticated approach taken by information hoarders is already evolving and arguably irreversible.
Race to the bottom of your soul
Companies have always sought to collate information about their customers – learning about consumer preferences enables businesses to cater their products, target their sales and boost their profits. But the process itself for collecting data has changed dramatically over the last decade. It was once far more direct, involving the obvious act of acquiring permission: surveys were filled out, consent was requested and signatures were given. Gaining an insight into consumer behaviour has come a long way since then; protocol and courtesy have been undermined by covert and misleading tactics.
Prices can vary not only between groups of people, but depending on situation, time and the location of the consumer
Social networking platforms can now access individuals’ intimate details instantaneously, with great ease and at almost no cost. Large, influential companies such as Google and Yahoo offer ‘free’ services – such as email accounts, online drives and search engines – in exchange for personal information. Public records and internet purchases are also used to create a complete picture of an individual – enabling the 21st-century phenomenon of online targeted marketing. “In order to do this, internet firms engage advertising companies to act as the ‘data broker’ between the consumer-facing website and the advertising company”, explains Horwitz.
The surveillance of customers has become a multibillion-dollar industry, with such exponential growth permitted by a lack of regulation. Companies have full rein to comb a multitude of sources (many of which are available for free) in order to create comprehensive databases.
As it is now incredibly easy to scour the internet and gather private data about individuals – from their credit rating to medical prescriptions – data brokers are offering up an awful lot for surprisingly little. With more players in the game, rivals are constantly undercutting each other’s fees and pushing the market price further down, meaning the personal details of internet users are worth less and less. As a result, data brokers hunt for ever more intimate details of consumers in order to outperform each other.
The information buyers vary greatly. Within a relatively short period of time, it has become normal for insurance groups, energy firms and mobile phone providers to purchase databases from brokers in order to maximise the purchasing potential of their customers. “Consumer data reveals quite a bit about consumers’ latent demographics, characteristics, and tastes”, says Benjamin Shiller, Assistant Professor of Economics at Brandeis University. This information has become a powerful tool that is used to tailor marketing strategies and bolster profits.
That being said, there are those who have chosen to opt out of this growing trend, for the benefits do not always outweigh the public backlash if and when customers become aware of, and perturbed by, this Big Brother style of business.
Price discrimination
Personal data can be used to assess how much a person is willing to pay for something based on their history, consumer preferences and how desperate they are to make the purchase. This means prices can vary not only between groups of people, but depending on situation, time, and the location of the consumer.
“Price discrimination exists when consumers ultimately pay different prices for identical products, and those price differences are not due to different costs of servicing the consumers”, Shiller explains. “Technology enables real time pricing by allowing price automation and rapidly incorporating consumer data.”
The cumulative collation of information, ever-increasing levels of connectivity, and the Internet of Things could take price discrimination to an alarming level in a very short time. Within a few short years, a petrol station may be able to charge more if you are running on an empty tank, or a retailer could charge more for an item of clothing because they know you can afford it. The end goal in this scenario is to create a market of one: an extreme form of personalised marketing, which will have a considerable impact on the traditional balance of power between consumers and companies.
Supermarket loyalty cards and coupons, membership incentives, and paying over the odds for last minute travel are already normalising price discrimination in the consumer psyche. “Coupons are used because they less obviously reveal the fact that the firm is explicitly charging different consumers different prices – something the firm may want to hide”, says Shiller.
Yet, the need to hide differential pricing is diminishing as the practice becomes more common. Of course, there are obvious benefits in targeted marketing and price differentiation: many consumers enjoy preferential prices in exchange for their loyalty or advanced planning, while the convenience factor is considerable in a modern, hectic daily schedule.
Acts of freedom
As a result of pressure from lobby groups and a general backlash from the public, governments are beginning to show their support for privacy protection and creating relevant legislation. In June, the US Senate voted in favour of the USA Freedom Act, the most significant revision to surveillance reforms since the late 1970s. The passage of the act ends the controversial practice of collecting the phone records of US citizens in bulk. Following a six-month grace period, the act obliges telecommunication companies to assume responsibility for the phone records collection programme. This decision came at the same time as the expiration of the Patriot Act, bringing an end to the sweeping surveillance powers enjoyed by the National Security Agency (NSA), which were enacted by President George W Bush in 2001.
Bush’s propagandised War on Terror following 9/11 and the argument that the Patriot Act was necessary in order to prevent acts of terrorism was largely accepted for some time. It was only when former CIA employee and NSA contractor Edward Snowden revealed the Patriot Act was used to justify the mass surveillance of millions of innocent citizens, both in and outside the US, that light was shed on the practice and public outrage ensued. As a number of independent studies have since found, the NSA’s phone collection programme has made no impact on preventing terrorism – strengthening the case of reform lobbyists.
The passing of the Freedom Act and the expiration of the Patriot Act marked a significant point in the protection of civil liberties, but there is still a great deal of data being shared and sold – much of it without the knowledge of its owners.
Apple’s CEO, Tim Cook, has spoken out against the mass collection of consumer data
Taking responsibility
Earlier this year, Tim Cook, Apple’s CEO and one of the most influential individuals in the tech world, spoke out against websites that provide convenience in exchange for personal data. “Some of the most prominent and successful companies have built their businesses by lulling their customers into complacency about their personal information”, he said during his speech at an event hosted by the Electronic Privacy Information Centre. “They’re gobbling up everything they can learn about you and trying to monetise it. We think that’s wrong”. With individuals such as Cook highlighting the need to address the problem, other organisations may be compelled to reverse their current data sharing practices. Yet, in order for real and lasting change to occur at this stage, legislation and a robust regulatory framework are crucial. Public demand and pressure from lobbyists and groups can demand such governmental action, as the Freedom Act illustrated.
That being said, it is reasonable for companies to collect information about their customers; this is a standard exercise in business and the cornerstone of marketing and advertising. It is also logical that, as methods for collecting such details have evolved with the online revolution, firms employ these tools to boost their profits in highly competitive markets and industries.
It is the responsibility of the individual to protect what they feel needs protecting. Some may choose to share information in exchange for preferential treatment, free services and greater convenience. There are others who may choose to opt out. But this is the key point in the process: having the option to choose one way or another.
To share or not to share should never be mandatory or perpetrated without knowledge, as has been the case in recent years. Moreover, unless people actively protect their online privacy and limit the information they share on the web, such details will continue to be used against them in more alarming ways and to their detriment. It is should be the challenge of companies to create such convenience and value that individuals choose to play the game. Either way, choice, along with privacy, is an irrefutable right that should be protected in every stratum of society.
Once heralded as a key source of energy that would ensure global carbon emissions were reduced, biofuels have failed to match the ambitions of their proponents in recent years. Not only have they not delivered the financial returns many investors hoped for, but they have also proven to be more polluting than expected.
The concept of transforming naturally-growing produce into fuel is one that excited many environmental campaigners. Seemingly sustainable and potentially limitless crops could be recycled into precious power, cutting the reliance of countries on environmentally damaging fossil fuels. However, while there are many types of produce that can be turned into fuel, they are not equally sustainable. Indeed, many crops that would have traditionally been used as food supplies – already a scarce resource in the world – have suddenly gained a growing and increasingly demanding new customer.
$126bn
Total biofuel investments over the last 12 years
40%
Predicted increase in US biofuel market in the next two years
The good and the bad
People often talk of ‘first’ and ‘second’ generation biofuels when trying to delineate between those that are ‘good’ and those that are ‘bad’. First generation biofuels tend to be ones extracted from food crops, such as maize, rapeseed and soya, and have seen most of the investment over the last decade or so because of the yields of those crops. Indeed, such has been the enthusiasm for these biofuels that investors have poured $126bn into the industry over the last 12 years, according to a report by Bloomberg New Energy Finance (BNEF).
However, all this demand is putting an increasing strain on already under-pressure food resources. Many parts of the developing world suffer from a lack of food, and increased demand for crops from rich developed nations wanting a supposedly greener way of powering their economies is only making things worse. It results in farmers focusing their efforts on developing non-food crops for their wealthy new customers, while neglecting the food crops and reducing capacity.
In a 2011 article for The Guardian, Tim Rice, Biofuels Policy Advisor for climate change charity ActionAid, wrote that biofuels were forcing global food prices higher. He said: “The drive for more biofuels to fuel vehicles and power stations in rich countries is having another, more localised effect. Companies are scouring the globe for land to meet biofuel targets. There is simply not enough land in the rich world to cater for the new demand; where better to look than in the developing world, particularly Africa where land is supposedly abundant and cheap?”
The alternatives to food crop biofuels are known as ‘cellulosic’ biofuels, and are made from waste, tobacco, seaweed, and other wood and non-food plants. However, none of these resources have yet proven commercially viable, even if they don’t impact on global food supplies. Even so, regulators are increasingly pushing the industry towards these types of biofuel.
One of the most widely touted second-generation plants is jatropha, which Goldman Sachs named one of the best prospects for sustainable biofuel. Though resistant to drought and pests, and abundant, few companies have so far managed to regularly create fuel out of it.
As a result of these pressures, European policymakers recently announced a series of new limits on the use of first-generation biofuels. The European Parliament has said it will change the existing 10 percent minimum EU member states must use for energy transport. Instead, member states must now only use a maximum of six percent food-based biofuels in transport use.
However, many in the first generation biofuel market have criticised the move, claiming it will cause jobs to be lost and hit investors hard. Indeed, the corn industry has profited considerably from this increase in demand for its resources as a fuel, and any limit on what it can sell its crops for will have a serious effect.
Around the same time, US regulators announced their country would reduce its reliance on corn ethanol for its biofuels market to 14 billion gallons by next year. The US biodiesel market will soar by 40 percent over the next two years, according to BNEF. These targets, however, have been met with outrage from both oil producers and corn farmers in the country.
Indeed, the oil industry has been one of the biggest proponents of biofuels, with both BP and Shell investing heavily in developing the technology as a method of reducing their carbon footprints. However, in 2013 it was reported both companies had scaled back their investments in the technology because it was not economically viable, and wouldn’t be so until at least 2020. BP reportedly scrapped a $300m cellulosic ethanol refinery project based in Florida because it couldn’t find an efficient way of using jatropha to create energy.
New uses
Using biofuels to power cars is certainly gaining traction among US regulators. In May, the US Environmental Protection Agency set ambitious targets for the country’s auto-industry to start using biofuels over the next two years.
While there has been a great amount of pessimism in the industry in recent years, MIT Technology Review reports biofuels could be used to create carbon-neutral vehicles. Percival Zhang, Professor of Biological Systems Engineering at Virginia Tech, is reported to have developed a new method of breaking down complex sugars found in plants that could deliver fuel for hydrogen-powered vehicles. These sugars are currently broken down by fermentation, which is not as efficient as Zhang’s new method. While the technology is still at an early stage, the potential for creating energy for vehicles in a more efficient way than existing technology could give the industry a shot in the arm.
Elsewhere, companies wanting to generate fuel are putting tobacco to good use. According to The Economist, a partnership between South African Airways and Boeing is turning some tobacco seeds into jet fuel, which they hope will become commonplace by 2022. The partners are also allowing poor farmers who have suffered from the declining tobacco industry to reinvest their proceeds in food crops.
The biofuel industry is set to undergo considerable change in the future, but appears to be at a crossroads right now. Cellulosic biofuels are yet to prove reliable alternatives to crop-based methods, which many want phased out. Speaking to Bloomberg in 2013, BNEF analyst Robert Rodriguez Labastida said: “Growth opportunities for first generation biofuels are close to exhausted, while a series of next generation technologies are not quite ready.”
While they were once touted as a viable alternative to oil, biofuels have had an unforeseen impact on the environment and poorer parts of the world. Unless there is a dramatic shift towards cellulosic fuels in the coming years, the industry is unlikely to form a major component of the future global energy mix.
According to market research conducted by industry research group Memoori, by 2020 smart buildings will be one of the largest vertical markets for the Internet of Things (IoT) in terms of revenue, at 16.8 percent of the market. You begin to realise the scale of this figure when you consider consumer electronics are only set to take 17.9 percent of the market. We will be spending almost as much on drawing data from our buildings as we will on the personal electronics that facilitate our daily lives.
The implications of these projections are felt nowhere as clearly as in our healthcare buildings. The needs of patient care facilities and operating rooms are becoming increasingly specialised, while problems such as overcrowding and underfunding work against the creation of the necessary optimised environments. This creates a dichotomy, where medical science advances towards increasingly specialised building control environments, but cost and space limitations dictate a need for multipurpose facilities. Healthcare facilities have some of the most complex multipurpose needs, and the tightest operating budgets.
16.8%
Smart buildings market share of the IoT, 2020
This is where recent advancements in the building automation system (BAS) industry start to bridge the gap. Building administration systems are capable of delivering more information about the equipment running within their buildings then they ever were in the past. Previously, the only way to know if equipment was running in an inefficient manner (or failing) was to perform an expensive retrocommissioning process, followed by an even more expensive equipment retrofit. These processes often resulted in high capital expenditures for the healthcare facilities, drawing budget away from other patient priorities. In the meantime, operating costs of the facilities continue to rise, because, like all systems, building systems degrade without constant maintenance.
Expert diagnosis
A smart building is able to report and even predict the breakage of equipment. Because the reporting process is ongoing, upkeep can be scheduled on a continual basis, smoothing out the operating costs of the facility and prolonging the operating life of large scale operating equipment. By using the data directly from the building system itself, individual systems can be assessed for upgrade or replacement based on operating efficiency. Previously, it was difficult to access and interpret building data, and very costly using physical meters to track energy performance. But as networks continue to advance, and more devices become capable of reporting information about their operation and efficiency, this data becomes more easily available and increasingly valuable – if you are able to act on that information.
But analytics alone is like an MRI scan: a picture that needs an expert to make the diagnosis. Delta Controls has focused on delivering actionable data through the advancement of its building automation system, winning Control Trends BAS System of the Year 2014, and through continual development of its enteliWEB software platform, which helps building managers operate their BAS from any mobile device.
Delta Controls recognised the importance of building analytics early and created a sister company, CopperTree Analytics, which specialises in gathering, analysing and providing insight into how to optimise building performance. CopperTree is designed to integrate with enteliWEB so users can not only see how their building is performing like never before, but they can make changes directly into the BAS to fix issues. Both products allow users to customise their own dashboards so they see exactly what is important for them to track and manage their environments. The result is a system that can be used by many more members of the building’s staff. Previously, BAS were just the domain of facilities managers and energy management specialists, but Delta combines dashboard capabilities with web access from smart devices to make day-to-day operations within healthcare facilities easier as well.
Dashboard approach
Stringent environmental controls need to be maintained while operating rooms are in use. This can be very costly, so most hospitals employ a complex booking and occupancy system to ensure the operating room is only conditioned when in use. Delta’s dashboard approach means staff members can be assigned to groups with pre-built interfaces for those systems. The interface is graphical so it can be designed to lead the user through the choices they need to make use of the system, reducing the need for specialised training.
Delta has developed a touchscreen interface, the enteliTOUCH, which serves as a visual aid for surgeons and is already deployed in healthcare facilities across the world. The screen can be programmed to become green when the operating room is within proper environmental tolerances, then flash or switch to red to alert staff if the space has become compromised and patient health may be at risk. This physical interface, which has been passed by various infection control bodies to stand up to the rigours of use in a hospital, provides a fully programmable graphics-based interface for staff to interact directly with their systems. Importantly, the equipment is able to withstand repeated cleaning with sterilising agents without its screens becoming damaged or the front plate being defaced.
The operating room environment and the equipment required to maintain it has become more complicated over the years. Operating rooms function on a complex series of air curtains that create zones of disease control, keeping patients safe from airborne contaminants. As a result, where environmental control was once a secondary consideration, it is now one of the prime concerns in maintaining patient health. If a contaminant finds its way into the space, staff need to be sure equipment is functioning properly and will continue to function in the future. What is needed for patient safety in these complex environments is a highly customisable and data-rich system.
The benefit is that this results in a smarter building that is better with its occupants: the system becomes more intuitive and predictive, operating costs are reduced, and users are encouraged to adopt greener and more economical habits. Building analytics and more intuitive systems are combining to answer today’s demands for flexible, cost-effective systems.
Google made a surprise announcement August 10 that it was to create a new holding company, named Alphabet, in a bid to simplify and streamline its operations. The shake-up, which caught many analysts unaware, means that Google can more effectively preside over the catalogue of companies it has acquired over the years.
The shake-up, which caught many analysts unaware, means that Google can more effectively preside over the catalogue of companies it has acquired over the years
“We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant,” wrote Larry Page in a company blog post.
The new parent company, which will go under the address https://abc.xyz, is to be led by Page, alongside the company’s co-founder Sergey Brin, whereas the core search engine business will go to the 43-year old up-and-coming senior vice-president of product Sundar Pichai. “This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead,” wrote Page. “I should add that we are not intending for this to be a big consumer brand with related products – the whole point is that Alphabet companies should have independence and develop their own brands.”
The holding company will preside over acquisitions that diverge somewhat from the company’s core focus, including, perhaps most notably, healthcare though extending also to smart home and drone technology. Google, meanwhile, will preside over many of the company’s better-known apps, not least YouTube and Android.
This new structure means that investors will be able to more easily digest the company’s spending and strategic decisions, and the initial response to the shake-up has been positive. The new Alphabet enterprise will replace Google as the company’s publically traded entity, that’s according to Page, and all shares will be converted automatically.
Little over half a year after the firm announced plans to suspend its India operations, the world’s number one contract electronics manufacturer has signed an agreement with India’s Maharashta state to invest $5bn in electronics manufacturing over the next five years. The deal marks one of the largest corporate FDI deals in the country’s history and should hand India’s burgeoning electronics manufacturing industry a much-needed pick-me-up.
India’s failure to improve its labour regulations and crumbling infrastructure have handed its manufacturing ambitions a knock or two
The new facility will include both a manufacturing and research and development unit, and should serve to create an additional 50,000 jobs. Perched between Mumbai and Pune, the facility will be the first of many to grace India in the coming years.
Put out by rising wages in China, where it makes iPhones and iPads, the country’s leading private employer is once again eyeing India’s low-cost opportunities in the hope that it might establish as many as a dozen new manufacturing facilities before 2020. This new electronics manufacturing facility also feeds into the Prime Minister’s “Make in India” campaign, through which he aims to transform the country into a manufacturing powerhouse. The expectation now is that suppliers will follow suit and speed India’s transition to world-beating manufacturer.
India’s failure to improve its labour regulations and crumbling infrastructure have handed its manufacturing ambitions a knock or two, yet Foxconn’s commitment to the country’s manufacturing drive will do much to boost confidence in the country’s growing stature. The company’s founder Terry Gou has stated previously that he plans to make India a key export hub for electronics, spearheaded by this first of many facilities, yet there is a great deal to be done before India matches up to rivals such as China.
It’s fair to say the last 12 months have come as a shock to the oil industry. The collapse in prices of crude has been exacerbated by geopolitical events, not least those in Ukraine and across the Middle East. At the same time, major oil-producing countries, led by Saudi Arabia, have maintained high levels. The resulting plunge in the price of oil may have been welcomed by consumers, but is causing great concern for both the industry and investors.
Looking for an alternative method of powering an increasingly energy-demanding world has led many to talk of a resurgence in the solar power industry. Once hailed as the future of energy generation, the solar industry took a serious hit to its credibility after a series of much-touted companies collapsed, partly due to the cost of the technology. Since then, however, the industry has managed to bring down prices substantially, and solar energy has become a genuine alternative to oil.
There is perhaps no more ringing an endorsement than the proclamation from Saudi Arabia’s oil minister, Ali al-Naimi, in May that he expected solar power to surpass oil within the next 25 years. For the man in charge of an industry so integral to the country’s economy to sound its death knell, the alternative must really be about to hit the mainstream.
Al-Naimi told a business and climate conference in Paris that the days of our reliance on oil and gas appeared numbered. “In Saudia Arabia, we recognise that, eventually, one of these days, we’re not going to need fossil fuels”, he said. “I don’t know when – 2040, 2050 or thereafter. So we have embarked on a programme to develop solar energy. Hopefully, one of these days, instead of exporting fossil fuels, we will be exporting gigawatts of electric power.”
23%
Increase in US electricity drawn from renewable sources in 2014
$150bn
Global solar investment in 2014
Oil’s days numbered
Al-Naimi’s comments aren’t new for a Saudi oil minister: as reported in the last issue of The New Economy, Saudi Arabia’s former oil minister, Sheikh Yamani, told The Daily Telegraph in 2000 that demand for oil would be far less by 2030 as a result of new technologies. “30 years from now, there will be a huge amount of oil – and no buyers”, he said. “Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil. On the supply side, it is easy to find oil and produce it, and, on the demand side, there are so many new technologies, especially when it comes to automobiles.”
Because of this ticking clock for the oil industry, Saudi Arabia has seemingly begun to try and get as much of its oil as possible out of the ground now, resisting calls from the US to slow production in order to prop up global crude prices. The impact on prices has caused many US producers to halt exploration and production efforts in their own territory, and increased pressure on Russia’s sanction-hit economy that relies so heavily on oil production.
However, while Saudi Arabia is trying to get whatever it can for its oil now, it is also looking further ahead to the day when nobody wants to buy crude. Solar power has emerged as the leading source of renewable energy in recent years, and one that many in the industry think will dominate global power consumption within a couple of decades.
Last year, the US Energy Information Administration reported electricity generation from renewable power surged 23 percent during 2014. Much of this was down to the astonishing growth of companies such as Elon Musk’s SolarCity, which tripled in value in 2013. In 2014, the global solar industry saw investments of $150bn.
Saudi’s investing
However, the solar industry has had a turbulent history. Despite being bolstered by generous government subsidies in many countries, the industry struggled to generate enough power to make the high cost of the technology sustainable. Solyndra was among the high-profile failures, costing US taxpayers $530m when it fell into bankruptcy in 2011.
Saudi Arabia’s investment in the industry will be considerable, with the country claiming it eventually wants to be entirely powered by renewable energy. In order to achieve this, in 2012 it announced a $109bn solar plant, although that was later delayed by around eight years.
Speaking to The Guardian in June, Mark Fulton, former Head of Climate Research at Deutsche Bank and now advisor to the Carbon Tracker Initiative, said the news of Saudi Arabia’s focus on solar power could prove a turning point for the energy industry. “Saudi Arabia is sending a strong signal to all oil producers and companies they must plan for an energy transition”, he said.
Echoing these sentiments was the Carbon Tracker Initiative’s Head of Research, James Leaton, who added in comments to The Guardian: “If Saudi Arabia is starting to hedge its bets by developing solar capacity, this could change the fundamentals of the oil market.”
Other countries are taking the industry seriously too. China is investing heavily in solar power, and has also helped drive down the cost of photovoltaic panels. Industries previously reliant on fossil fuels – notably the car industry – are also now using electricity as the basis for their future energy needs.
The proclamations over solar energy’s potential by Saudi Arabia come in the lead up to a crucial summit on climate change at the end of the year. The UN will meet in Paris in December to discuss what countries must do to bring down their carbon emissions and combat the effects of climate change. With such a heavy exporter of oil touting solar as the future of the energy industry, it seems as though countries are finally looking at their longer-term energy needs.
According to the International Energy Agency, if countries agree to new climate change targets, renewable energy could overtake oil and coal as the world’s primary fuel within 15 years. At the centre of this will be a solar power industry that has bounced back and now offers the world a serious alternative to polluting fuels.
CEO Dick Costolo resigned back in June this year, with Twitter’s co-founder, Jack Dorsey, stepping in to fill the role on a temporary basis.
“I am tremendously proud of the Twitter team and all that the team has accomplished together during my six years with the company,” Costolo said in a statement. “We have great leaders who work well together and a clear strategy that informs our objectives and priorities.”
The social networking service has seen its shares take a battering
The social networking service has seen its shares take a battering, with them falling by 3.3 percent and reaching an all-time low of $27.55 when the market closed yesterday – which is only marginally higher than its 2013 IPO price of $26.
The company is no closer to finding a suitable replacement for Costolo, which is leaving shareholders increasingly dissatisfied, a fact exemplified by the social network’s continued share price decline.
Twitter’s falling share price does make it an attractive prospect for Google, which recently announced in a blog post that it plans to scale back its unpopular social networking service, Google Plus.
“When we launched Google Plus, we set out to help people discover, share and connect across Google like they do in real life,” posted Bradley Horowitz, Vice-President of Streams, Photos and Sharing for Google Plus. “While we got certain things right, we made a few choices that, in hindsight, we’ve needed to rethink. So over the next few months, we’re going to be making some important changes.”
“You’ll see these changes roll out in stages over several months. While they won’t happen overnight, they’re right for Google’s users—both the people who are on Google+ every single day, and the people who aren’t,” he added.
Google is eager to have its own social networking platform, but it will need to fend off other potential suitors such as Apple, Amazon and even Facebook.
On its opening day earlier this year, the Nagasaki-based Henn-Na Hotel was fronted by 10 almost-identical attendants, each fluent in several languages and contracted to work a 168-hour week. One of the 10 “has been improved in her astonishing appearance and high performance and is now even cuter than her older sister”, while another “is capable of creating exotic facial expressions”. That’s according to the Japanese robotics company Kokoro.
This so-called ‘robot hotel’, with its small staff of androids, has ambitions to have over 90 percent of its services operated by similar machines. While it might be unusual, the case of Henn-Na Hotel feeds into a common discussion about the role of robotics in Japan’s growth story.
Historically speaking, robots have played a larger role in the country than in any other. Over the years, the government has gifted hundreds of millions of dollars in handouts to the robotics industry, in the hope that it might boost productivity. Statistics compiled by the International Federation of Robotics show 40 percent of Japan’s robot population (or 300,000) are hard at work, largely in industrialised jobs. However, with the country’s human population having fallen 268,000 in only the last year, without something much larger – something akin to a robot revolution perhaps – Japan’s labour shortage could spell trouble for its stop-start economy.
48%
Of Japan’s robots fulfil industrial roles
268k
Fall in Japan’s population, 2014-15
$7.5bn
Defence robotics market, 2018
$37bn
Industrial robotics market, 2018
Demographic crisis
According to the country’s Labour, Health and Welfare Ministry, the estimated number of newborns last year clocked in at just over one million, making it the fourth consecutive year in which the figure has fallen to an all-time low. Sources also say that, allowing for local revisions, the figure could fall below the one million mark – and all in a time when deaths have exceeded one million every year since 2002.
Not long ago, the government warned Japan’s population could shrink from 127 million to 87 million before 2060, with 40 percent aged 65 or older, should the situation continue to unravel. More than three years on and the Japanese are still reluctant to welcome immigrants, who make up less than two percent of the population, and the country’s fertility rate is among the lowest worldwide. What’s more, with its workforce on course to shrink a further 16 percent before 2030, Japan’s economy may well be without the manpower to make a measurable impact on its debts.
The issue has blighted outer-lying regions already, with many small towns either underpopulated or occupied only by elderly residents. Elsewhere, the obstacles standing in the way of female participation remain very much intact, as is negative sentiment to unmarried cohabitation and children born outside marriage.
Conventional wisdom holds Japan’s enduring conservatism, chronic worker shortage and ageing population will invite greater deflationary pressures on a country that has only recently escaped collapsing prices. Studies from Tokyo’s Waseda University show an ageing population has pushed consumer prices down 0.6 percent every year for the past 40. And with economic stagnation having already had a hand in reducing population growth, the country must take action – and quickly – to meet its growing demographic challenges.
It is with these issues front and centre that the government last year called for a “robot revolution” to reignite Japan’s fire.
Robot revolution
“This robot revolution will help to solve problems with the declining birth rate, ageing society, services and nursing care, and in agriculture, construction and infrastructure maintenance, and more”, says Gudrun Litzenberger, General Secretary of the International Federation of Robotics. “The utilisation of robot technologies will further improve Japan’s productivity, enhance companies’ earning power, and raise wages.”
The inaugural meeting of the Robot Revolution Initiative Council this year saw Prime Minister Shinzo Abe take to the stage and call on companies to “spread the use of robotics from large-scale factories to every corner of our economy and society”. Received positively by the country (inasmuch as the sentiment was subscribed to by 200 leading companies and universities), the five-year drive, if successful, will see robotics sales reach JPY 2.4trn ($19.6bn) by 2020, up from JPY 600bn ($4.9bn) currently. Kodomoroid reads the latest news bulletins, Telenoid hands out hugs, and Twendy-One conducts household chores. But all these could soon pale into insignificance should Japan’s robot revolution take hold.
In manufacturing, in construction and in the service sector, robotics could relinquish some of the pressure weighing on the country’s overstretched labour force – that is if the Robot Revolution Initiative Council can boost cooperation with the private sector. “The largest number of industrial robots is operating in the factories of Japan”, says Litzenberger. “Japan is the predominant robot manufacturing country and more than 50 percent of the global supply of industrial robots [is] produced by Japanese companies. Even robots are assembled by robots.” This commitment to robotics has only been set out in an official capacity recently, but that isn’t to say Japan’s robot obsession is anything close to a recent phenomenon.
In the National Museum of Emerging Science and Innovation sits the 10-year-old automaton ASIMO: as clear an indication as any that the country has long stood at the cutting edge of robotics. On the international stage there is no other country more infatuated with robotics than it, and since the 1950s robots have been part and parcel of the national psyche. Some researchers have even speculated robotic pets could replace the real deal within the decade, and reports earlier this year showed owners of Sony’s discontinued Aibo dog were holding funerals for their retired companions. Even Abe joined the love-in last year when he campaigned for a Robot Olympics to coincide with Tokyo’s own.
Buoyed by widespread support, generous government incentives and favourable demographic trends, the rise of the machines over the past half-century has been almost wholly without opposition. However, only in recent years has robotics come to be seen as a viable solution to the country’s demographic crisis.
Twendy-One works as a carer and is capable of a number of physical tasks
New competitiveness
Central to Japan’s robotics push is a burning ambition to hold onto the country’s undisputed lead in robotics, particularly as rival nations nearby and further afield threaten to dislodge its place at the front. With its competitiveness fading and companies elsewhere catching up fast, Japanese firms have taken great strides to underline their superiority.
Tokyo-based SoftBank, for example, last year unveiled Pepper: a cloud-based AI it claims can read human emotions. “People describe others as being robots because they have no emotions, no heart”, said the company’s Chief Executive Masayoshi Son at Pepper’s unveiling. “For the first time in human history, we’re giving a robot a heart, emotions.” Beyond that, the company’s calculations show Pepper is equivalent to three human workers in terms of productivity, taking into account the reduced cost of labour and ability to work round the clock. Should SoftBank’s wide-eyed, all-purpose workers strike a chord with consumers, they could play a key role in the coming five years, throughout which the government plans to increase the use of robots 20-fold.
Mitsubishi UFJ Financial Group, meanwhile, recently unveiled Nao, a pint-sized robot bank teller introduced to serve non-Japanese-speaking customers in branch. Measuring 58-centimetres in height and accomplished in 19 languages, the intention is for Nao to enter widespread use before the Tokyo Olympics in 2020.
The hope for models such as Pepper, Nao and a string of others is that they might inject a shot of productivity into Japan’s inefficient service sector, which, according to METI, is only 60 percent as productive as the US. Presented as a near perfect solution to Japan’s chronic labour shortage, the fear – not necessarily for Japan but in rival developed countries – is that these robo-workers could take much-needed jobs away from their out-dated human counterparts.
Ahead of the fear that robotics could leave millions jobless, however, is the concern that Japan could soon lose its distinction as the go-to home of all things robotics. For decades, no other country has encroached on its dominance, yet studies show it enjoys no such comfort in the present climate. The government is keeping a close eye on neighbouring China, which, as of 2014, was home to 530 robotics companies and occupied a 13 percent share of the market, up from four percent in 2012, while South Korea and the US have also unsettled policymakers. While still accountable for over half of all industrial robotics and 90 percent of parts, developments on foreign soil could upset the country’s dominance elsewhere.
Foreign threat
As a long-time leader in military robotics, the US last year had over 11,000 unmanned aerial vehicles and another 12,000 ground robots to its name, under the assumption that the key to modern warfare lies not with man but machine. Generous defence budgets of days past have given rise to an army of robots beyond that of any other nation, despite China’s fast-growing military prowess having chipped away at the country’s technological superiority. This market for defence robotics is forecast to reach $7.5bn globally before 2018, according to Global Industry Analysts. But with industrial robotics alone on course to tip $37bn by the same year, it’s in these markets that the real opportunities lie.
In China, sales of industrial robots last year surpassed 57,000, representing a 55 percent increase on the year previous and a quarter of global sales, according to the Ministry of Industry and Information Technology. China has already surpassed Japan as the largest consumer of robots worldwide, and Song Xiaogang, President of the country’s Robotics Industry Association, believes sales will continue to climb at a yearly rate of 40 percent.
With China’s younger generations shunning simple manufacturing jobs in favour of skilled work, and wages rising, robotics has been time and again proposed as a means of slashing costs and boosting productivity. The country’s dependence on labour-intensive factories also does a disservice to its aspiring millennials, and the introduction of robots could quicken China’s transition away from manually assembled products and on to advanced manufacturing.
Shenzhen Evenwin Precision Technology, a manufacturer of mobile phone components, unveiled plans earlier this year to construct a factory staffed almost entirely by robots as part of the country’s automation push. Based in China’s Dongguan manufacturing hub, the facility is to be built in answer to spiralling labour shortages in the Guangdong province, where an additional 600,000 to 800,000 workers are needed, according to the region’s Department of Human Resources and Social Security. Should the factory materialise as planned, many more could follow.
The International Federation of Robotics announced recently that, by 2017, China will have more robots in production plants than any other country. Yet quality remains an issue for a market consisting of mostly simple machines, and any person looking for a high-end model must take their search overseas. China’s robot-to-worker ratio is also short of its competitors at about 30 to 10,000, down on Japan’s 332 and South Korea’s 396. “Although Japan paved the way, South Korea now leads in the highest per capita density of robots, and China and Germany are following suit”, says Jennifer Robertson, Professor of Anthropology and the History of Art at the University of Michigan.
These figures have led some to speculate South Korea could soon threaten Japan’s dominance, with demand for industrial robots there tipped to reach the $2.3bn mark before 2021 and Korea’s Ministry of Commerce, Industry and Energy planning to finish up a $1bn ‘Robot Land’ project in 2018. And so, while China looks to build on its 3,200 percent bump in sales over the last decade, aiming to manufacture one third of robots before the end of 2015, South Korea has launched a half-decade-long push that will see it spend $500m each year.
For Japan, it’s not only in manufacturing that robots could relieve the pressure. Robertson says: “Abe is earmarking $24m toward the development of caregiving robots to augment a serious shortage of nurses, due in large part because of the impossibly rigorous exams (in Japanese) given to otherwise highly qualified Indonesian and Filipina nurses who wish to work in Japan. In terms of lucrative markets, Japanese robotics is now collaborating in the weapons economy, one of PM Abe’s new, and highly controversial, nationalist initiatives.”
Kawasaki Heavy Industries uses robot machinery to pack lunches and make pizzas
The perfect fit
Superior robot-to-worker ratios and consumption aside, widespread claims that Japan’s robot industry is under siege are grossly overstated. Robertson says: “Where the Japanese can continue to lead is in the area of robotics spin-off industries, such as: new optical lens and haptic devices; new synthetic materials, from ceramics to artificial skin; surveillance technologies; modes of human-robot interaction, and so forth.” Japanese robot makers still account for some 60 percent of the market, China about a quarter, and the rest is made up of mostly European and American names. Add to that the country’s fitting demographic trends and generous government incentives, and it looks like Japan can only build on its leadership.
“Since the post-war period, Japan has pursued a policy of automation over replacement migration”, says Robertson. “Japan employs more industrial robots than any other country, and is the world’s biggest supplier of robots. That said, robots are still not advanced and versatile enough to do non-assembly-line work, and thus special visa arrangements have and are being made to recruit labourers from outside of Japan – China in particular.” The government has routinely allocated JPY 600bn ($4.9bn) to the field of robotics, though policymakers have recently committed to a budget four times that size in the hope it might usher in a new industrial age of machines. Failing that, the expanded budget will at the very least suppress the country’s worsening labour crisis, inasmuch as robots could both boost a shrinking workforce and keep watch over an ageing population.
With Japanese technology having lost ground to major international rivals in recent years (namely Apple, Samsung and Google), the rise of the robots could mean Japan retakes the spotlight. The country’s challenges leave it uniquely positioned to pursue robotics in a way others are less inclined to, and, should events unfold as predicted, we could well see the beginnings of a robot revolution.
For years, the concept of a weaponised laser has sat in the back of man’s collective imagination, but thanks to the US aerospace and defence company Boeing, it could one day become a reality. Boeing has a long history of offering its engineering and scientific support to the US Armed Forces under an Innovative Research and Optical Site Support contract extension of the Air Force Research Laboratory. Over the years, it has developed and designed laser defence systems for both land-based and maritime environments.
“Boeing’s teams of highly skilled engineers and scientists at these sites have provided decades of world-class support services, as well as laser and adaptive optics research”, said David DeYoung, an executive at Boeing Laser Technical Services, in a statement on the company’s website. “We are pleased to be able to work with our Air Force customer to continue to provide the innovative technologies and affordable services that are essential to advancing these programmes.”
Only 20 percent of those asked believed laser weapon technologies would be a truly viable option within the next
10 years
Precision weapon
Late last year, the US Army and Boeing unveiled the capabilities of one their joint projects: the High Energy Laser Mobile Demonstrator (or HEL MD for short). During the demonstration, the prototype was attached to an Oshkosh tactical military vehicle, which allows the technology to be mobile, as well as making it the first high-energy laser anti-projectile rig to be fully researched, developed and deployed by the US Army.
“It has a very game-like feel”, Boeing’s electro physics engineer Stephanie Blount told Nature, in reference to the system. “It’s a very cost-effective solution to taking out cheaply made weapons like small mortars or rockets made out of sewer pipe.”
The fact the tests were carried out in the middle of a desert points to one of the big problems laser weaponry faces: its effectiveness in the battlefield is dramatically reduced when operating in cloudy or foggy conditions. However, Boeing and the US Army think they may have finally cracked this problem.
“Under windy, rainy and foggy weather conditions in Florida, these engagements were the most challenging to date with a 10kW laser on HEL MD,” said DeYoung. “As proven at White Sands Missile Range in New Mexico in 2013 and at Eglin Air Force Base this spring, HEL MD is reliable and capable of consistently acquiring, tracking and engaging a variety of targets in different environments, demonstrating the potential military utility of directed energy systems.”
He added: “With capabilities like HEL MD, Boeing is demonstrating that directed energy technologies can augment existing kinetic strike weapons and offer a significant reduction in cost per engagement. With only the cost of diesel fuel, the laser system can fire repeatedly without expending valuable munitions or additional manpower.”
Boeing and the US Army were able to show off the technology’s prowess in last year’s demonstrations. The team managed to take down over “150 aerial targets, including 60mm mortars and unmanned aerial vehicles (UAVs)”, according to a statement released by the aerospace and defence contractor.
The next challenge for the development team is to test how the HEL MD will perform after increasing the overall power of the laser. More recently, in February, Boeing was given a $29.5m contract by the US Navy and asked to design and develop a laser beam control system with the intention of it being used aboard a naval warship to bring down aerial targets.
Boeing and the US Armed Forces have previously experimented with airborne lasers
Work in progress
But despite these significant milestones, there is still a long way to go. According to a poll of US national security specialists taken last year, only 20 percent of those asked believed laser weapon technologies would be a truly viable option within the next 10 years.
In fact, many of the defence contractors and weapons manufacturers are hesitant to confirm a date when the technology will be fully fit for purpose. According to Nature, many companies believe it could take up to five years before a truly fully operational system will be ready and, despite Boeing’s tests, adverse weather conditions will make conventional countermeasures more effective.
“It’s very, very far from Star Wars in all kinds of ways”, explained Andy Extance, the writer behind the Nature article, in an interview. “The one [thing] that I guess perhaps disappointed me the most is the fact that there is no ‘pew pew pew’ noise kind of going on. You can’t see the laser beams, you can’t hear them, it’s hard to know that anything is going on a lot of the time.”
All in all, the technology, for the time being at least, is a useful alternative for protecting naval vessels from incoming missiles and UAVs, but it’s still not reliable enough for us to do away with traditional forms of defence just yet. For now, practical, weaponised lasers remain a fantasy, but there is clearly a concerted effort to improve the technology: one that may help save many lives in the future.
